Bill aims to provide tax credits for biobased chemical production

Sen. Debbie Stabenow, D-Mich., recently introduced legislation that aims to establish a short-term tax credit to support the production of renewable chemicals or investments in renewable chemical production facilities.

The bill, titled the Renewable Chemicals Act of 2017, or S. 1980, was introduced on Oct. 18. To date, Sens. Susan Collins, R-Maine; Christopher Coons, D-Del.; Al Franken, D-Minn.; and Tammy Baldwin, D-Wis., have signed on to cosponsor the bill.

The bill allow taxpayers to claim a production tax credit of 15 cents per pound of biobased content of each renewable chemical produced during the taxable year. Renewable chemicals are defined as those produced in the U.S. from renewable biomass and used as or for the production of chemical products, polymers, plastics or formulated products. Qualified chemicals must have a biobased content of at least 95 percent and be the product of biological conversion, thermal conversion or a combination of the two. Qualifying renewable chemicals cannot be sold or used for the production of any food, feed or fuel product.

The legislation also allows for taxpayers to claim an investment tax credit in lieu of the production tax credit. The production tax credit for any taxable year would be an amount equal to 30 percent of the basis of any eligible property that is a part of a renewable chemical production facility placed in service by the taxpayer during the taxable year.

The senate bill is companion legislation to H.R. 3149, which was introduced by Rep. Bill Pascrell, D-N.J., in June.

The Biotechnology Innovation Organization has spoken out to thank Stabenow, Baldwin, Collins, Coons and Franken for their support of renewable chemical companies. “This new legislation will help U.S. companies compete in a rapidly growing global renewable chemicals market, revitalize domestic manufacturing, and create millions of new U.S. jobs,” said Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section.

Mark Schweiker, senior vice president of Philadelphia area-based Renmatix and former Pennsylvania governor, commented, “As many U.S. Senators now know, there is growing momentum for the biobased industry to commercialize cost-competitive pathways to bio-materials and renewable chemicals. The economy-building potential of this bill is tremendous and will stimulate the nascent U.S. renewable chemicals market, especially in rural America.”

Hugh Welsh, president of DSM NA, headquartered in Parsippany, New Jersey, added, “We are grateful for Senator Stabenow’s continued leadership and vision on innovation, renewable chemicals and a U.S. manufacturing renaissance as reflected in her sponsorship of the Renewable Chemicals Act of 2017. This legislation will further support employment, economic growth and continue to encourage global companies like DSM to make additional investments in the United States.”

Additional information, including a full copy of the bill, is available on the Congress.gov website.